Buying a car can be a great experience; however, it can also be very frustrating one if you aren’t prepared. If you don’t do your homework, you may wind up paying thousands more than you should in fees and interest payments, depending on the type of car loan you get. If you’ve never applied for a car loan before, there are a few things you should expect during the loan process.
Gather the Necessary Information
No matter where you get your car loan from, you can bet that there will be a mountain of paperwork needed. You’ll most likely need to provide proof of income, residency, and current insurance in order to qualify for the loan. You may also need to provide contact information for personal references.
Most lending institutions in Sweden such as https://www.billan24.se/ will want to see paycheck stubs or tax returns as proof of income. If you’re self-employed, this can sometimes be difficult and may slow down the loan process. Therefore, if you’re self-employed, it’s best to call up potential lenders as soon as possible to determine what specific proof of insurance they require well before you plan to apply for the loan.
Proof of residency can be a utility bill, voter registration card, or even a piece of incoming mail. You’ll also need to provide proof of auto insurance – typically a card or letter from your insurance provider – to the dealership before you’re allowed to leave with the car.
Negotiating the Deal
When you sit down with the loan officer, try not to be intimidated. They are working for you – you are their customer, not the other way around. If you don’t understand part of the paperwork, ask questions. If you don’t get the answer you want, ask again. If you feel as though you’re getting the run around, stand up and walk away. There are many different lenders and car dealerships – you don’t have to use one that you feel isn’t providing the information you need.
If you feel the interest rate is too high, ask for a lower one. Don’t like the down payment amount? Ask if it can be lower. If you’re trading a car in on another one, make sure you get what the car is worth. Do your homework ahead of time to find out what your old car is worth, what your new car is worth, and what an average interest rate is for your credit score. Generally, the better your credit score, the lower your interest rate. A credit score lower than 600 is considered bad credit, and you can expect your interest rate to be much higher. You may want to wait to purchase your new car until you’re able to raise your score – even if it’s just a few points – as you can save hundreds of dollars on interest payments over the life of the loan.
Signing the Paperwork
When you’ve reached an agreement on financing, make sure you read through the paperwork carefully. Know the loan amount, when your payments are due, what the loan’s interest rate is, and how long the term of the loan is. This will make it much more unlikely that you’ll be late on a payment.
A Final Thought
Applying for a car loan isn’t that difficult, but sometimes actually getting the loan is – especially in this economy. If you get denied, ask what you can do to improve your chances for approval next time. The most important thing is to ask questions about anything you don’t understand and follow up with any recommendations the lender makes for you.